By J.P. Dahdah, Founder & CEO of Vantage
Too many investors devote their entire nest egg to the stock market. But if you have all your eggs in one basket, you run the risk of greater damage when the market moves contrary to your expectations.
In this post, you’ll learn five facts to help you diversify your investments with precious metals so you are hedged against the volatility of the stock market.
- First, understand that not just gold, but also silver, platinum and palladium qualify as precious metals, and all these materials are used not only for ornaments but also in industrial production of various kinds.
- Second, it has been noticed that gold (in particular) is not affected by stock market conditions and therefore acts as a hedge in bearish markets. Gold is in fact a good investment in inflationary conditions and will generate good returns if bought during these times.
- Third, precious metals are, however, a commodity and therefore undergo significant fluctuations in prices, which increase the risk of investment. Particularly, since they have increased in value at an explosive rate in the past 5 years.
- Fourth, investment in precious metals need not be in the form of an outright purchase. It is possible to invest indirectly, through shares of a mining company, futures, or funds or ETFs with a precious metal focus. The majority of Self-Directed IRA investors, however, prefer to invest in the physical metals and store them at an approved depository institution for safekeeping.
- Fifth, careful consideration of the investment is necessary, because the right time to buy is in uncertain markets. Different companies dealing in precious metals have their individual concerns (ongoing projects, management team, history and so forth) that could affect the quality of the investment. A fund with limited exposure (low single-digit percentage) to the segment may be the right choice, as it could provide the hedge but minimize the uncertainty involved in the investment. Selecting a credible and knowledgeable precious metals broker that has experience handling Self-Directed IRA transactions is encouraged.
So if you are considering the diversification of your portfolio, or feel the need to hedge your stock market risk, you can turn to precious metals to do the trick for you.
What else can you think of to diversify your portfolio and lower the total risk?
FFor more information on how you can discover your IRA investing alternatives, contact our team at (866) 459-4590 or Info@VantageIRAs.com.